In Central Sun Mining Inc v Vector Engineering Inc., the Court of Appeal for Ontario recently considered when Ontario courts may assume jurisdiction of an action.1 This decision is of interest to parties who wish to commence, or are defending, an action involving events that occurred in more than one jurisdiction. These issues are often complicated, but always important—especially considering the increasingly cross-border nature of many business transactions.
Central Sun involved a dispute between an Ontario-based mining company, Central Sun, and a group of American engineering consultants, Vector. The litigation centred on consulting services Vector provided to Central Sun in relation to a mine it owns in Costa Rica, including recommendations regarding its design, stability, location and operation. Following the destruction of the mine by a major landslide, Central Sun brought a claim for damages in Ontario against Vector on the grounds of negligence, negligent misrepresentation and breach of contract in relation to the reports it provided.
At issue in the appeal was whether or not the Ontario court could properly assume jurisdiction over the action. As described below, the appeal turned on the question of where the tort of negligent misrepresentation occurred. At the appeal, there was no argument advanced that the allegations of breach of contract and negligence took place inside of Ontario.
At the heart of Vector's submissions was the argument that the work was performed on-site in Costa Rica and then sent to Central Sun's office in Vancouver. In response, Central Sun argued that even though the studies were initially provided only to its technical staff in Vancouver, the reports and the Vancouver staffs' recommendations were then sent to Toronto where its senior executives relied on that information.
Motion judge's decision
The motion judge agreed with Vector. At first instance, the court found that because most of the work was done in Costa Rica or the USA, and then sent to Vancouver, the misrepresentation did not occur in Ontario. In coming to this conclusion, the motion judge found the connection between the misrepresentation and Ontario was relatively minor compared to that of other jurisdictions, and thus successfully rebutted the presumptive connection with Ontario.
Court of Appeal's decision
The Court of Appeal reversed the motion judge's decision and held that a misrepresentation may occur in the jurisdiction it is received and acted upon. The court affirmed that the leading test on jurisdictional issues is Club Resorts Ltd. v Van Breda2, and overturned the motion judge's finding that the presumptive connection of a tort with Ontario can be rebutted by considering the relative weakness of its connection. Rather, the Court of Appeal applied the test from Van Breda, and confirmed the presumptive connection will be rebutted only where a relatively minor element of the tort occurred in Ontario.
Since Central Sun's executives in Toronto received and acted on Vector's recommendations, the court held that a presumptive connection between the action and Ontario was established. Notably, the court confirmed a plaintiff only needs to establish that one of the causes of action pleaded has a connection to Ontario for the court to assume jurisdiction over the entire action.
This is an important decision for companies doing business with other companies that have offices both inside and outside Ontario. From this case, it seems that unless a defendant can establish that only a "relatively minor" element of the tort occurred in Ontario, Ontario courts may assume jurisdiction of a dispute that, on its face, did not appear connected to Ontario.
The author wishes to thank Dana Carson, articling student, for her help in preparing this Legal update.
Footnotes
1 2013 ONCA 601.
2 2012 SCC 17.
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